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Rogers bumps up phone fees

Local phone prices in cities such as Toronto have yet to budge – and in some cases are set to increase – despite Ottawa's efforts last year to boost competition by deregulating the industry.

Former phone monopolies Bell Canada Inc. and Telus Corp. have so far been focused on using their new-found pricing flexibility to offer discounted bundles of phone, TV and high-speed Internet services in several markets, not lower local phone rates across the board.

That, in turn, has given Rogers Communications Inc. the confidence to actually raise its local home phone prices via a 30 per cent hike – to $5.95 from $4.50 – in the monthly "system access fee" charged to subscribers, itself a source of consumer frustration.

The increase – one of a series of fee increases on March 1 for its residential cable, Internet and telephone services – amounts to a 4 per cent hike in the price of Rogers' cheapest home phone plan. Unlike Bell and Telus, Rogers was never subject to price regulation in the local phone market.

"What's surprising about this is that it pertains to local telephones," said Michael Janigan, the executive director of the Public Interest Advocacy Centre in Ottawa. "We were told that prices were going to go down with the advent of local telephone deregulation."

The federal government said last April that it was accelerating plans to deregulate local phone service.

Former Industry Minister Maxime Bernier promised at the time the change would "put the customer first."

Under the new rules, Bell and Telus are no longer required to obtain federal regulatory approval to change their phone prices in any consumer market as long as there are three competing service providers, one of which can be a wireless carrier.

The phone companies had argued the change was necessary to allow them to better compete with local phone newcomers such as Rogers, which has snagged hundreds of thousands of Bell and Telus customers by offering discounts on so-called "triple play" bundles of phone, TV and Internet services.

Iain Grant, managing director of consulting firm The Seaboard Group, said Rogers' price hike demonstrates a growing confidence in the quality of its phone service, which is based on Voice over Internet Protocol technology.

"Rogers raising their rates says to me that customer satisfaction is pretty good. They don't need discounts to pull people in any more."

Taanta Gupta, a Rogers spokesperson, said the firm's pricing strategy is "to be competitive, not at a premium."

But Janigan took issue with the way Rogers is planning to raise its local phone rates.

He said increasing the so-called "system access fee" allows Rogers to keep its advertised rate low while leading consumers to believe the extra charge is coming from somewhere else. He likened it to the controversial "fuel surcharge" that some airlines add to their tickets.

Rogers isn't alone in this practice. Bell charges a $5.95 "network access" fee to customers who have a discounted long distance plan. Telus, meanwhile, charges a $4.95 "long distance administration fee" for customers with a plan and a $2.95 "network access charge" for those who don't.

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All three companies are currently being targeted by a class-action lawsuit that alleges the "system access" fees charged to their wireless subscribers – $6.95 at Rogers and Telus and $8.95 at Bell – unfairly misled people into thinking it was a government-mandated tax.

Gupta said the Rogers home phone "system access fee," which is described on the firm's website as a "non-government fee," is meant to offset the "hundreds of millions" the cable firm invested in the technology needed to offer its telephone service.

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